Written by Dorothy McMahon
The Court of Appeal’s decision in Young v Anglo American South Africa Limited & Ors has served to clarify that foreign subsidiaries of UK companies are not necessarily at risk of being sued before the English courts.
The case involved two jurisdictional applications being brought against a South African registered company, Anglo American South Africa Limited (“AASA”). The Claimants were seeking to sue AASA in England on the basis that AASA’s central administration was in England. This view derived from AASA’s parent, Anglo-American PLC being an English company, with its head office in London and its shares listed principally on the LSE.
On 31 July 2014, the Master of the Rolls, Lord Justice Aikens and Dame Janet Smith delivered an important judgment clarifying the interpretation of “central administration” in relation to establishing a company’s domicile under the Brussels 1 Regulation (“the Regulation”). If AASA was found to be domiciled in England, it could be sued in the English courts pursuant to Article 2 of the Regulation and without obtaining the leave of the court pursuant to CPR 6.33(1).
Domicile acts as the primary ground for jurisdiction under Article 60(1) of the Regulation. For these purposes, a company is domiciled where it has its:
(a) Statutory seat (e.g. its registered office);
(b) Central administration; or
(c) Principal place of business.
Did the High Court of England and Wales have jurisdiction to hear the claim?
The Claimants accepted that AASA did not have a statutory seat in England, nor was England its principal place of business. Thus, the key question that arose was whether there was a “good arguable case” that AASA had its “central administration” in England at the time when the proceedings were issued for the purposes of Article 60(1)(b) of the Regulation. The Claimants argued it was the parent company, through which group “big” decisions were made. On the other hand, it was averred that a distinction should be drawn between “mere secondary management tasks” (such as accounting and tax matters) and “essential business decisions”, the latter of which, in this case, took place in South Africa.
The Court of Appeal held that the correct interpretation of “central administration” was that it was the place where the company concerned, through its relevant organs according to its own constitutional provisions, took the decisions that are essential for that company’s operations, i.e. where it conducts its entrepreneurial management. In summary, Article 60 was “about where a company carries out functions, not about where others carry out functions that affect it.” The evidence indicated that AASA carried out the entirety of its business in South Africa, not in London. The Court went so far as to say that there was not only no “good arguable case” that AASA had its “central administration” in England at the relevant time, but that there was no case at all.
The decision acts as a reminder that when dealing with foreign subsidiaries of UK companies, any jurisdictional issues relating to Article 60 of the Regulation need to be considered fully at the outset and before proceedings are issued. Whilst Lord Justice Aikens’ logical analysis of the case law and commentary is welcomed, it should be noted that the English judiciary will not hesitate to defer claims to the court of proper jurisdiction on a case-by-case basis.
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